Digitalisation is becoming central to Islamic finance in Malaysia, with regulators identifying blockchain, AI and e-KYC as key drivers of the sector’s next phase.
Bank Negara Malaysia outlined this direction at the Kuala Lumpur Islamic Finance Forum 2025.
Assistant Governor Suhaimi Ali said Islamic finance now forms a major part of the financial system.
Islamic banking accounts for 47 percent of total financing, takaful represents 25 percent of net contributions and Malaysia holds 36 percent of global sukuk. SRI assets reached RM11.9 billion in 2024.
He said the sector is well placed to support national priorities, including the RM1.2 trillion to RM1.3 trillion needed for the net-zero transition and growth in the halal economy and SME sector under the Thirteenth Malaysia Plan.
Suhaimi noted rising global demand for Shariah aligned finance.
Islamic Development Bank member countries require between US$700 billion and US$1 trillion annually to meet sustainable development goals.
Suhaimi said Islamic finance, grounded in fairness and risk sharing, can help channel capital to economies pursuing inclusive growth.
“ What we need now is collective will. As a central bank, we remain committed to supporting responsible innovation, enabling experimentation, and strengthening collaboration across industries, sectors, and borders.
Risk-sharing frameworks, social blended protection models, and sustainability financing tools are early examples of what becomes possible when we work together with purpose.”
He called for stronger value based intermediation, with sustainability embedded into product design, risk assessment and performance evaluation.
Better tools, he said, are needed to measure outcomes in poverty alleviation, SME development and environmental impact.
He pointed to social finance initiatives such as myWakaf and iTEKAD.
Suhaimi said faster innovation is needed to respond to climate risks, food security pressures and digital disruption.
He highlighted wider use of mudarabah and musharakah and the role of platforms such as i-CITA in developing new financing models.
Suhaimi added that Islamic finance can deepen Malaysia’s role in the halal economy by strengthening supply chains, supporting overseas expansion and advancing the country’s aim to be a hub for halal innovation.
He said blockchain can improve sukuk and waqf transparency, big data can measure economic impact and AI can support Shariah compliance.
Digital onboarding and e-KYC can expand access for underserved communities and reinforce alignment with Maqasid Shariah.
Suhaimi closed by saying continued collaboration and innovation will be essential for Islamic finance’s next phase.
Featured image: Edited by Fintech News Malaysia, based on image by Trend2023 via Freepik
